Key Takeaways
- House Republicans passed a budget plan with $4.5 trillion in tax cuts and $2 trillion in spending reductions.
- The plan looks to extend key Tax Cuts and Jobs Act tax breaks before they expire at the end of 2025.
- Senate Republicans favor a different approach, setting up a major fiscal battle.
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House Republicans narrowly passed a multi-trillion-dollar budget framework on Tuesday, marking a major victory for President Donald Trump and Speaker Mike Johnson. The 217-215 vote advances Trump’s economic agenda — including $4.5 trillion in tax cuts, increased border security funding, and military spending.
A key driver of this budget debate is the upcoming end of the Tax Cuts and Jobs Act (TCJA) provisions at the end of 2025. While Republicans aim to extend or expand many of these tax cuts, the challenge will be finding ways to offset lost revenue while navigating opposition in the Senate.
Key Details of the Budget Plan
The budget proposal seeks $2 trillion in spending cuts over the next decade to help fund tax reductions. It also includes over $100 billion in new spending for immigration enforcement and national defense.
One of the most significant components of the budget is its proposal to extend key TCJA provisions, including:
- Lower individual tax rates, which are set to rise at the end of 2025
- 20% pass-through deduction (Section 199A) for businesses, helping small and mid-sized companies
- Expanded child tax credit, which would otherwise shrink from $2,000 per child to $1,000 in 2026
- $10,000 cap on state and local tax (SALT) deductions, a hot-button issue for high-tax states like California and New York
Trump has also floated lowering the corporate tax rate from 21 percent to 15 percent for companies that manufacture in the U.S., though this is not yet included in the House plan.
While Trump has insisted that Medicaid, Medicare, and Social Security will remain untouched, critics argue that such deep cuts will be difficult to achieve without affecting major social programs.
GOP Divisions and Trump’s Influence
Winning support for the resolution was difficult. Some House Republicans opposed the budget, arguing that it does not go far enough in cutting federal spending. The first vote was delayed when it became clear the measure lacked sufficient backing.
Speaker Johnson and House Majority Leader Steve Scalise worked behind the scenes to secure votes from key Republican holdouts, with Trump personally calling lawmakers to push the measure forward. In the end, only one Republican — Rep. Thomas Massie of Kentucky — voted against the bill, while all Democrats opposed it.
Democratic Opposition and Future Challenges
Democrats argue the proposed budget overwhelmingly benefits corporations and wealthy individuals while cutting funding for social programs. House Minority Leader Hakeem Jeffries warned the plan could lead to the largest Medicaid reduction in U.S. history, though Trump insists that entitlement programs will remain untouched.
The budget also faces an uphill battle in the Senate, where Republicans favor splitting tax reform into two bills: one focused on tax cuts and the other addressing border security and defense spending. Trump, however, has pushed for a single, sweeping bill — setting up a potential conflict between House and Senate Republicans.
What’s Next?
The TCJA provisions end in December 2025, adding urgency to the budget debate. If Congress does not act, individual tax rates will rise, the standard deduction will shrink, and business tax benefits will phase out — impacting millions of individual taxpayers and companies.
The Senate will now review and negotiate the House’s budget proposal, with significant revisions expected. Lawmakers must also decide how to fund the tax extensions, as Republicans may need to accept some spending adjustments or revenue increases to secure passage.
For now, the House budget plan reinforces Trump’s influence over tax policy and positions the GOP for a high-stakes fiscal showdown in the months ahead.
How MGO Can Help Your Business Adapt to Tax Policy Changes
With key provisions of the TCJA set to expire at the end of 2025, businesses must prepare for potential tax increases and regulatory changes. The expiration could mean higher individual tax rates, reduced deductions for pass-through businesses, and a lower standard deduction — impacting tax planning for companies and executives alike.
As lawmakers debate extending or modifying these provisions, proactive tax strategies are essential. MGO’s comprehensive tax services help businesses and high-net-worth individuals navigate evolving tax laws, optimize deductions, and maintain compliance at the federal, state, and international levels. From pass-through entity planning and R&D tax credits to SALT strategies and corporate tax structuring, we provide tailored guidance to help you manage liabilities and opportunities in an uncertain legislative environment.